1. A restaurant has an average check of $14.50 with an average variable cost of
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Question
1. A restaurant has an average check of $14.50 with an average variable cost of $6.96. Fixed costs are $102,000. Calculate the following
Unit contribution margin_______?
Breakeven units________?
Variable cost percentage______?
Contribution margin percentage_______?
Breakeven sales revenue__________?
Unit contribution margin: $6.74
Breakeven units: $14,961
Variable cost percentage: 42%
Contribution margin percentage: 58%
Unit contribution margin: $4.74
Breakeven units: $15,961
Variable cost percentage: 28%
Contribution margin percentage: 72%
Unit contribution margin: $7.54
Breakeven units: $13,528
Variable cost percentage: 48%
Contribution margin percentage: 52%
Breakeven sales revenue: $196,154
Unit contribution margin: $7.64
Breakeven units: $13,691
Variable cost percentage: 52%
Contribution margin percentage: 48%
Breakeven sales revenue: $188,254
2. An assumption under CVP analysis is that:
Fixed costs will remain fixed in the long run
All relevant costs can be broken down into their fixed and variable elements
Variable costs will change in inverse fashion with sales revenue
Total costs will not increase as sales revenue increases
3. A restaurant has a food operation with a 30% variable cost and a bar operation with a 25% variable cost. The food operation produces 60% of total sales revenue and the bar 40%. If the restaurant owner wanted an extra $7,500 in operating income, and the added income was to come from just the bar sales, by how much would bar sales revenue only have to increase to provide this added profit?
$30,000
$18,750
$25,000
$10,000
4. A 40-room motel recorded the following: total room-cleaning cost incurred and Rooms sold for the high and low months of Year 0001.
Units sold
Total Costs
High Month
10,000
$10,600
Low Month
4,000
7,000
Determine vairable and fixed costs elements of total costs.
Variable Cost Per Room = $0.60
Total Fixed Cost Per Month = $4,600
Variable Cost Per Room = $0.65
Total Fixed Cost Per Month = $4,800
Variable Cost Per Room = $0.70
Total Fixed Cost Per Month = $5,600
5. The matching principle asserts
the economic life of a business can be divided into artificial time periods
that revenues are recorded when received
the efforts of a business are related to its accomplishments
that expenses are paid when they are incurred
6. A restaurant has sales revenue of $500,000, variable costs of $200,000, and fixed costs of $200,000. The owner wants net income after tax of $40,000. The tax rate is 30%. What is the operating income (before tax)?
$ 17,143
$ 40,000
$ 57,143
$133,333
7. Fixed costs are $85,000, operating income required is $25,000, rent income is $5,000, and the contribution margin is 35%. Sales revenue will have to be_______?
$162,286
$314,286
$177,286
$329,286
8. A motel has an average room rate of $58, an occupancy rate of 70% and the motel has 100 rooms. The double occupancy rate is 40%. The spread of $20 is wanted between single and double room rate. Calculate the following:
a) Single room rate is $__________, b) Double room rate is $__________
a) Single rate $45
b) Double rate $65
a) Single rate $55
b) Double rate $75
a) Single rate $35
b) Double rate $55
a) Single rate $50
b) Double rate $70
9. A restaurant specializes in a seafood buffet serving dinner only, at a price of $15.75 per person. Its average variable cost is $6.30 per person. The fixed cost is $6,000 per month. How many buffet meals must be served monthly to break even if they are open 20 days per month?
952
380
32
635
10. A 150-seat restaurant caters to members only, opening for lunch 5 days a week and 7 days a week for dinner. Lunch seat turnover is 1.5 and dinner turnover is 2.5. Average check for lunch is $14.50 and dinner average check is $22.00. Calculate by meal period and total sales revenue forecast for the month of March. Assume 23 weekdays in March.
Lunch = $75,038
Dinner = 200,750
March total sales forecast = $330,788
Lunch = $70,038
Dinner = 200,750
March total sales forecast = $330,788
Lunch = $75,038
Dinner = 255,750
March total sales forecast = $330,788
Lunch = $75,038
Dinner = 290,750
March total sales forecast = $330,788
Unit contribution margin: $6.74
Breakeven units: $14,961
Variable cost percentage: 42%
Contribution margin percentage: 58%
Unit contribution margin: $4.74
Breakeven units: $15,961
Variable cost percentage: 28%
Contribution margin percentage: 72%
Unit contribution margin: $7.54
Breakeven units: $13,528
Variable cost percentage: 48%
Contribution margin percentage: 52%
Breakeven sales revenue: $196,154
Unit contribution margin: $7.64
Breakeven units: $13,691
Variable cost percentage: 52%
Contribution margin percentage: 48%
Breakeven sales revenue: $188,254
Explanation / Answer
Percentage Average Check 14.5 Variable cost 6.96 48 Contribution 7.54 52 Break Even Units = Fixed Cost/ Contribution = 102000/7.54 13527.85 13528 1 The correct answer is Unit contribution margin: $7.54 Breakeven units: $13,528 Variable cost percentage: 48% Contribution margin percentage: 52% Breakeven sales revenue: $196,154 2
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